Bangladesh’s Economy: Oasis of Growth in South Asia

In the years since its independence, Bangladesh's economy has made tremendous strides.

While the global attention on Bangladesh only pivoted on the country due to disasters and poverty, Bangladesh however laudably altered the narrative surrounding the country--elevating it to the position of one of the robust South Asian economies. While economies worldwide are increasingly facing headwinds, Bangladesh's development trajectory has remained immune to the crisis--which attests to the country's economic resilience. Even amidst such brisk economic development, some economists forbode that Bangladesh's economy is in peril. Nonetheless, defying the negative speculations, the economy of Bangladesh is forging ahead at an undiminished pace.

While COVID-19 had jolted the world's economy and precipitated the widespread crisis, Bangladesh had registered positive economic growth, a stunning feat that had bewildered the observers. Despite repeated speculation by many quarters that the economy was on the verge of unforeseen strain, prudent economic management had kept the country's economy afloat even amidst a widespread gloomy situation. Simultaneously, Bangladesh surpassed neighboring India in terms of GDP per capita, which triggered debate in both countries. Besides, in contrast with the perennial political bickering and economic management in Pakistan, which had been buffeted by a series of political and economic crises, Bangladesh's economy remains robust. Furthermore. while Covid-19 had battered the economy of Sri Lanka and debilitated the country's economic prospects, Bangladesh's economy however remains remarkably safe. Even when the Sri Lankan economy had plunged into unprecedented economic upheaval, and when Pakistan's economy remains at the mercy of the IMF, the economy of Bangladesh remains a striking anomaly in its South Asian rivalries.

While western economists had termed the economic progress of Bangladesh as a paradox, however, the stellar economic growth of the country is a consequence of well-calibrated government policies that had been confluence to bolster the robustness and resilience of the country's economy.

Defying Challenges: A Testament to Economic Resilience

What is perhaps puzzling about Bangladesh's economy is how the country managed to surmount a litany of challenges. Developing countries--due to political instability, nascent infrastructure development, and lack of prudent policy-making--remains susceptible to an economic shock. Nonetheless, Bangladesh fared well in face of a cocktail of crises, which accelerated the growth dynamics of the country.

Bangladesh's economy had taken off in 2009 when a semblance of political stability resurfaced in the country after years of political turmoil. The period also coincided with a watershed moment in global economic history, as the economic crisis had pummeled the western developed countries and ripple effects were discernible in the developing countries. Nonetheless, the economy of Bangladesh witnessed unforeseen growth between 2009 and 2019, when the world economy was plagued by low growth. The sustained economic development, even despite the forbidding challenges, had transformed the socio-economic dynamics of the country, making the country a striking case of economic development.

While the economy of Bangladesh was on a stellar streak, Covid-19 had jolted the world economy, disrupting the global supply chain and bringing international interactions to a grinding halt. Economic presaged that Bangladesh's economy remains distinctly vulnerable to COVID-19, and such an argument was compelling as the economy of the country hinged on the RMG sector and remittance earnings from expatriates. However, such premonitions had been negated as the economy of the country had registered positive growth at a time the world economy was reeling from an unprecedented crisis. What's perhaps striking is the fact that, even amidst the gloomy days of COVID-19, the inflow of remittances to the country had surpassed the earlier records. This made the economy of the country a paradox, as the economy remained immune to COVID-19 even when the economists predicted otherwise.

Metamorphosis of Economy

In the wake of the liberation war of Bangladesh, the country was bequeathed a rickety economy from Bangladesh, which had been worsened by sustained discrimination against Pakistan and the lingering effects of the liberation war. The fledging country, spearheaded by Sheikh Mujibur Rahman, had shouldered the redoubtable responsibility to set right the haphazard economy. In this context, Bangladesh's economy had evoked pity from western countries, and some have gone to the extent of terming the economy a "basket case". Others, however, maintained that the economy of the country constitutes the "test-case of development", implying that if the economy of Bangladesh can attain development, it would be exemplary for other countries at a similar stage.

In the intervening fifty years, the economy of Bangladesh had traversed a litany of challenges, and made tremendous strides, to become one of the resilient economies of South Asia, defying a host of political and economic crises.

Bangladesh's remarkable economic growth is a result of a series of factors that have confluence spur positive economic dynamics in the country. The RMG sector, which has witnessed a remarkable upswing underpinned by the country's availability of abundant human resources, has bolstered the economic potential of Bangladesh. Due to the contribution of the RMG sector, the socio-economic landscape of Bangladesh has witnessed momentous changes in the last few decades. The employment opportunities that had been occasioned due to the proliferation of RMG industries in the country had facilitated social upliftment, thus contributing to societal change. Besides, the feminization of labor in the RMG sector. had lifted women out of perennial subjugation, and offered women agency in society.

Besides, due to its abundant pool of human resources, Bangladesh had been a vibrant source of employees for Middle Eastern and European countries, contributing to the economy by garnering remarkable amounts of remittances. The remittance inflow remains robust amidst the pandemic-induced economic upheaval. Moreover, the RMG sector coupled with the remittance inflow constitutes the plank of the country's economy, driving economic viability in the context of a widespread economic crisis.

Unlike other countries in South Asia, economic policy in Bangladesh had been guided by fiscal prudence. Hence, the economic policies facilitated the remarkable growth of the country. Besides, unlike other countries that stifle economic growth by imposing curbs on the economy, Bangladesh's economy provided latitude for private enterprise, which spurred and sustained growth in the country.

Furthermore, unlike other countries that had precipitated economic crises due to harebrained economic measures and lack of timely intervention, Bangladesh's economic policies have been laudably timely in proactively mitigating any indications of the looming threat. For example, in the context of dwindling reserves, the policymakers had undertaken a slew of measures to avert any looming upheaval, Likewise, to forestall the drain of the country's coffers due to undue subsidization, the government had adjusted the energy prices. Moreover, the sustained economic growth of Bangladesh is far from a miracle, rather had been calibrated by deliberate and prudent economic policies.

Infrastructural Development as a catalyst

Infrastructural development had been the cornerstone of the economic growth of Bangladesh. The rapid development of infrastructure has facilitated communication and obviated the obstacles to unhindered business. Besides, the development of infrastructure had attracted Foreign Direct Investment (FDI). The recent inauguration of the Padma Bridge marks a culmination of the decades-long infrastructure development, that has been underpinned by the policy of development. Moreover, the infrastructure development has spurred the economic growth of Bangladesh and will sustain the economic growth in the foreseeable future, maintaining economic resilience.

Juxtaposing Bangladesh with South Asian Countries

Bangladesh remains an anomaly among its South-Asian neighbors. Especially, Bangladesh's recent economic growth had made the country surpass its two neighbors. Especially, while the other countries in South Asia are confronting unprecedented economic challenges, Bangladesh's undiminished growth has bewildered the economist. Bangladesh had leapfrogged the Indian economy amid Covid-19, triggering considerable debate in the subcontinent regarding the advent of South Asia's new economic powerhouse.

Underpinned by its abundant remittances, Bangladesh is set to maintain its per capita lead until 2026. In 2020, while the economic output of India plummeted from the US $2098 to US $1929, Bangladesh's surpassed India as the per capita GDP of Bangladesh stood at US $1961.

Bangladesh's per capita GDP has witnessed a rise since 2004, attaining a 6% growth in the previous 15 years. While the economic performance of Bangladesh remained buoyant, the economy of India however is in evident decline since 2017. While the GDP of Bangladesh was half of India's before the 2008 debt crisis, nonetheless Bangladesh's economy had witnessed a growth of 70%, transcending its largest neighbor.

Bangladesh eclipsed India in terms of a series of economic and social indicators. Bangladesh's economic performance dwarfs India in terms of trade balance of goods, employment, investment in GDP, and budget. Besides, the staunch resolve of the government to drive socio-economic development, is evident in numerous government policies aimed at the advancement of women, facilitating girls' education, and reduction of fertility. Furthermore, Bangladesh had surpassed India in terms of a series of human development indexes e.g., life expectancy, child nutrition, and fertility. Besides. unlike India's skewed development which caters to a certain economic class, Bangladesh's economic growth is more dispersed. Thus, the inclusive growth model of Bangladesh had ameliorated the standards of living, ensuring better health care and education.

Bangladesh had surpassed Pakistan across a slew of economic indicators. Bangladesh has transformed into one of the burgeoning economies of the world. Besides, Bangladesh fared well in terms of GDP per capita, GDP growth rates, and nominal gross domestic product in comparison with Pakistan. Furthermore, the scenario of human development in Pakistan pales in comparison with Bangladesh. The infant mortality rate is a case in point to demonstrate Bangladesh's advancement in the human development front. While there were 22 deaths per 1000 live births in Bangladesh in 2018, the infant mortality rate in Pakistan in the same year was 57. Besides, the present life expectancy in Bangladesh stands at 73 while the life expectancy in Pakistan is 67. This indicates the rapid improvement of Bangladesh in terms of social and human development. Social development catalyzed economic development in Bangladesh, as significant advances in education and human development enhanced economic productivity. Thus, Bangladesh's economic development is rooted in social development, which has cemented sustained growth in Bangladesh.

Moreover, the economy of Bangladesh, which had been once termed a "basket case”  by commentators,  had made commendable strides, uplifted millions and driving widespread development. The stunning resilience of the country in withstanding numerous crises attests to the sustained economic growth of Bangladesh. While economic development is often considered a "miracle" or " paradox", rather economic development is a consequence of well-calibrated and prudent economic policies that facilitated economic growth. While an economic tempest is sweeping the South Asian economies, Bangladesh remains exemplary to indicate how to navigate overwhelming economic upheavals. The prudent policies allowed Bangladesh to surpass its neighbors, which are holding back due to a series of structural problems. Nonetheless, structural transformation coupled with commendable socioeconomic development had spurred the economic development of Bangladesh, propelling its rise in the South Asian economy.

Sent in by  Nanziba Mahmood a Graduate of International Relations, University of Delaware

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